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Managing Quality

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Title: Managing Quality


1
Operations Management
Chapter 6 Managing Quality
PowerPoint presentation to accompany
Heizer/Render Principles of Operations
Management, 7e Operations Management, 9e
2
Outline
  • Global Company Profile Arnold Palmer Hospital
  • Quality and Strategy
  • Defining Quality
  • Implications of Quality
  • Malcolm Baldrige National Quality Award
  • Cost of Quality (COQ)
  • Ethics and Quality Management

3
Outline Continued
  • International Quality Standards
  • ISO 9000
  • ISO14000

4
Outline Continued
  • Total Quality Management
  • Continuous Improvement
  • Six Sigma
  • Employee Empowerment
  • Benchmarking
  • Just-in-Time (JIT)
  • Taguchi Concepts
  • Knowledge of TQM Tools

5
Outline Continued
  • Tools of TQM
  • Check Sheets
  • Scatter Diagrams
  • Cause-and-Effect Diagrams
  • Pareto Charts
  • Flowcharts
  • Histograms
  • Statistical Process Control (SPC)

6
Outline Continued
  • The Role of Inspection
  • When and Where to Inspect
  • Source Inspection
  • Service Industry Inspection
  • Inspection of Attributes versus Variables
  • TQM in Services

7
Learning Objectives
  • When you complete this chapter you should be able
    to
  • Define quality and TQM
  • Describe the ISO international quality standards
  • Explain Six Sigma
  • Explain how benchmarking is used
  • Explain quality robust products and Taguchi
    concepts
  • Use the seven tools of TQM

8
Managing Quality Provides a Competitive Advantage
Arnold Palmer Hospital
  • Deliver over 13,000 babies annually
  • Virtually every type of quality tool is employed
  • Continuous improvement
  • Employee empowerment
  • Benchmarking
  • Just-in-time
  • Quality tools

9
Quality and Strategy
  • Managing quality supports differentiation, low
    cost, and response strategies
  • Quality helps firms increase sales and reduce
    costs
  • Building a quality organization is a demanding
    task

10
Two Ways Quality Improves Profitability
Figure 6.1
11
The Flow of Activities
Organizational Practices Leadership, Mission
statement, Effective operating procedures, Staff
support, Training Yields What is important and
what is to be accomplished
Figure 6.2
12
Defining Quality
The totality of features and characteristics of a
product or service that bears on its ability to
satisfy stated or implied needs
American Society for Quality
13
Different Views
  • User-based better performance, more features
  • Manufacturing-based conformance to standards,
    making it right the first time
  • Product-based specific and measurable
    attributes of the product

14
Implications of Quality
  • Company reputation
  • Perception of new products
  • Employment practices
  • Supplier relations
  • Product liability
  • Reduce risk
  • Global implications
  • Improved ability to compete

15
Key Dimensions of Quality
  • Performance
  • Features
  • Reliability
  • Conformance
  • Durability
  • Serviceability
  • Aesthetics
  • Perceived quality
  • Value

16
Malcom Baldrige National Quality Award
  • Established in 1988 by the U.S. government
  • Designed to promote TQM practices
  • Recent winners
  • Premier Inc., MESA Products, Sunny Fresh Foods,
    Park Place Lexus, North Mississippi Medical
    Center, The Bama Companies, Richland College,
    Texas Nameplate Company, Inc.

17
Baldrige Criteria
Applicants are evaluated on
18
Takumi
  • A Japanese character that symbolizes a broader
    dimension than quality, a deeper process than
    education, and a more perfect method than
    persistence

19
Costs of Quality
  • Prevention costs - reducing the potential for
    defects
  • Appraisal costs - evaluating products, parts, and
    services
  • Internal failure - producing defective parts or
    service before delivery
  • External costs - defects discovered after
    delivery

20
Costs of Quality
21
Leaders in Quality
W. Edwards Deming 14 Points for Management Joseph
M. Juran Top management commitment, fitness for
use Armand Feigenbaum Total Quality
Control Philip B. Crosby Quality is Free, zero
defects
22
Ethics and Quality Management
  • Operations managers must deliver healthy, safe,
    quality products and services
  • Poor quality risks injuries, lawsuits, recalls,
    and regulation
  • Organizations are judged by how they respond to
    problems
  • All stakeholders much be considered

23
International Quality Standards
  • ISO 9000 series (Europe/EC)
  • Common quality standards for products sold in
    Europe (even if made in U.S.)
  • 2000 update places greater emphasis on leadership
    and customer satisfaction
  • ISO 14000 series (Europe/EC)

24
ISO 14000Environmental Standard
  • Core Elements
  • Environmental management
  • Auditing
  • Performance evaluation
  • Labeling
  • Life cycle assessment

25
TQM
  • Encompasses entire organization, from supplier to
    customer
  • Stresses a commitment by management to have a
    continuing, companywide drive toward excellence
    in all aspects of products and services that are
    important to the customer

26
Demings Fourteen Points
  1. Create consistency of purpose
  2. Lead to promote change
  3. Build quality into the product stop depending on
    inspection
  4. Build long-term relationships based on
    performance, not price
  5. Continuously improve product, quality, and
    service
  6. Start training
  7. Emphasize leadership

Table 6.1
27
Demings Fourteen Points
  1. Drive out fear
  2. Break down barriers between departments
  3. Stop haranguing workers
  4. Support, help, improve
  5. Remove barriers to pride in work
  6. Institute a vigorous program of education and
    self-improvement
  7. Put everybody in the company to work on the
    transformation

Table 6.1
28
Seven Concepts of TQM
  • Continuous improvement
  • Six Sigma
  • Employee empowerment
  • Benchmarking
  • Just-in-time (JIT)
  • Taguchi concepts
  • Knowledge of TQM tools

29
Continuous Improvement
  • Represents continual improvement of all processes
  • Involves all operations and work centers
    including suppliers and customers
  • People, Equipment, Materials, Procedures

30
Shewharts PDCA Model
Figure 6.3
31
Six Sigma
  • Two meanings
  • Statistical definition of a process that is
    99.9997 capable, 3.4 defects per million
    opportunities (DPMO)
  • A program designed to reduce defects, lower
    costs, and improve customer satisfaction

32
Six Sigma
  • Two meanings
  • Statistical definition of a process that is
    99.9997 capable, 3.4 defects per million
    opportunities (DPMO)
  • A program designed to reduce defects, lower
    costs, and improve customer satisfaction

Figure 6.4
33
Six Sigma Program
  • Originally developed by Motorola, adopted and
    enhanced by Honeywell and GE
  • Highly structured approach to process improvement
  • A strategy
  • A discipline - DMAIC

34
Six Sigma
DMAIC Approach
35
Six Sigma Implementation
  • Emphasize defects per million opportunities as a
    standard metric
  • Provide extensive training
  • Focus on corporate sponsor support (Champions)
  • Create qualified process improvement experts
    (Black Belts, Green Belts, etc.)
  • Set stretch objectives

This cannot be accomplished without a major
commitment from top level management
36
Employee Empowerment
  • Getting employees involved in product and process
    improvements
  • 85 of quality problems are due to process and
    material
  • Techniques
  • Build communication networks that include
    employees
  • Develop open, supportive supervisors
  • Move responsibility to employees
  • Build a high-morale organization
  • Create formal team structures

37
Quality Circles
  • Group of employees who meet regularly to solve
    problems
  • Trained in planning, problem solving, and
    statistical methods
  • Often led by a facilitator
  • Very effective when done properly

38
Benchmarking
Selecting best practices to use as a standard for
performance
Use internal benchmarking if youre big enough
  • Determine what to benchmark
  • Form a benchmark team
  • Identify benchmarking partners
  • Collect and analyze benchmarking information
  • Take action to match or exceed the benchmark

39
Benchmarking Factors for Web Sites
Use of meta tags Yes 70, No 30
Meaningful homepage title Yes 97, No 3
Unique domain name Yes 91, No 9
Search engine registration Above 96
Average loading speed 28K 19.31, 56K 10.88, T1 2.59
Average number of spelling errors 0.16
Visibility of contact information Yes 74, No 26
Presence of search engine Yes 59, No 41
Translation to multiple languages Yes 11, No 89
Table 6.3
40
Best Practices for Resolving Customer Complaints
  • Make it easy for clients to complain
  • Respond quickly to complaints
  • Resolve complaints on first contact
  • Use computers to manage complaints
  • Recruit the best for customer service jobs

41
Just-in-Time (JIT)
  • Relationship to quality
  • JIT cuts the cost of quality
  • JIT improves quality
  • Better quality means less inventory and better,
    easier-to-employ JIT system

42
Just-in-Time (JIT)
  • Pull system of production scheduling including
    supply management
  • Production only when signaled
  • Allows reduced inventory levels
  • Inventory costs money and hides process and
    material problems
  • Encourages improved process and product quality

43
Just-In-Time (JIT) Example
Work in process inventory level(hides problems)
44
Just-In-Time (JIT) Example
Reducing inventory revealsproblems so they can
be solved
Unreliable Vendors
Capacity Imbalances
Scrap
45
Taguchi Concepts
  • Engineering and experimental design methods to
    improve product and process design
  • Identify key component and process variables
    affecting product variation
  • Taguchi Concepts
  • Quality robustness
  • Quality loss function
  • Target-oriented quality

46
Quality Robustness
  • Ability to produce products uniformly in adverse
    manufacturing and environmental conditions
  • Remove the effects of adverse conditions
  • Small variations in materials and process do not
    destroy product quality

47
Quality Loss Function
  • Shows that costs increase as the product moves
    away from what the customer wants
  • Costs include customer dissatisfaction, warranty
    and service, internal scrap and repair, and
    costs to society
  • Traditional conformance specifications are too
    simplistic

Target-oriented quality
48
Quality Loss Function
Figure 6.5
49
Tools of TQM
  • Tools for Generating Ideas
  • Check sheets
  • Scatter diagrams
  • Cause-and-effect diagrams
  • Tools to Organize the Data
  • Pareto charts
  • Flowcharts
  • Tools for Identifying Problems
  • Histogram
  • Statistical process control chart

50
Seven Tools of TQM
(a) Check Sheet An organized method of recording
data
/ /
/ / /// / // ///
// ////
/// // /
Hour Defect 1 2 3 4 5 6 7 8 A B C
/ / //
/
Figure 6.6
51
Seven Tools of TQM
(b) Scatter Diagram A graph of the value of one
variable vs. another variable
Figure 6.6
52
Seven Tools of TQM
(c) Cause-and-Effect Diagram A tool that
identifies process elements (causes) that might
effect an outcome
Figure 6.6
53
Seven Tools of TQM
(d) Pareto Chart A graph to identify and plot
problems or defects in descending order of
frequency
Figure 6.6
54
Seven Tools of TQM
(e) Flowchart (Process Diagram) A chart that
describes the steps in a process
Figure 6.6
55
Seven Tools of TQM
(f) Histogram A distribution showing the
frequency of occurrences of a variable
Figure 6.6
56
Seven Tools of TQM
(g) Statistical Process Control Chart A chart
with time on the horizontal axis to plot values
of a statistic
Figure 6.6
57
Cause-and-Effect Diagrams
Figure 6.7
58
Pareto Charts
59
Flow Charts
MRI Flowchart
  1. Physician schedules MRI
  2. Patient taken to MRI
  3. Patient signs in
  4. Patient is prepped
  5. Technician carries out MRI
  6. Technician inspects film
  1. If unsatisfactory, repeat
  2. Patient taken back to room
  3. MRI read by radiologist
  4. MRI report transferred to physician
  5. Patient and physician discuss

60
Statistical Process Control (SPC)
  • Uses statistics and control charts to tell when
    to take corrective action
  • Drives process improvement
  • Four key steps
  • Measure the process
  • When a change is indicated, find the assignable
    cause
  • Eliminate or incorporate the cause
  • Restart the revised process

61
An SPC Chart
Figure 6.8
62
Inspection
  • Involves examining items to see if an item is
    good or defective
  • Detect a defective product
  • Does not correct deficiencies in process or
    product
  • It is expensive
  • Issues
  • When to inspect
  • Where in process to inspect

63
When and Where to Inspect
  1. At the suppliers plant while the supplier is
    producing
  2. At your facility upon receipt of goods from the
    supplier
  3. Before costly or irreversible processes
  4. During the step-by-step production process
  5. When production or service is complete
  6. Before delivery to your customer
  7. At the point of customer contact

64
Inspection
  • Many problems
  • Worker fatigue
  • Measurement error
  • Process variability
  • Cannot inspect quality into a product
  • Robust design, empowered employees, and sound
    processes are better solutions

65
Source Inspection
  • Also known as source control
  • The next step in the process is your customer
  • Ensure perfect product to your customer

Poka-yoke is the concept of foolproof devices or
techniques designed to pass only acceptable
product
66
Service Industry Inspection
Organization What is Inspected Standard
Jones Law Office Receptionist performance Billing Attorney Is phone answered by the second ring Accurate, timely, and correct format Promptness in returning calls
Table 6.5
67
Service Industry Inspection
Organization What is Inspected Standard
Hard Rock Hotel Reception desk Doorman Room Minibar Use customers name Greet guest in less than 30 seconds All lights working, spotless bathroom Restocked and charges accurately posted to bill
Table 6.5
68
Service Industry Inspection
Organization What is Inspected Standard
Arnold Palmer Hospital Billing Pharmacy Lab Nurses Admissions Accurate, timely, and correct format Prescription accuracy, inventory accuracy Audit for lab-test accuracy Charts immediately updated Data entered correctly and completely
Table 6.5
69
Service Industry Inspection
Organization What is Inspected Standard
Olive Garden Restaurant Busboy Busboy Waiter Serves water and bread within 1 minute Clears all entrée items and crumbs prior to dessert Knows and suggest specials, desserts
Table 6.5
70
Service Industry Inspection
Organization What is Inspected Standard
Nordstrom Department Store Display areas Stockrooms Salesclerks Attractive, well-organized, stocked, good lighting Rotation of goods, organized, clean Neat, courteous, very knowledgeable
Table 6.5
71
Attributes Versus Variables
  • Attributes
  • Items are either good or bad, acceptable or
    unacceptable
  • Does not address degree of failure
  • Variables
  • Measures dimensions such as weight, speed,
    height, or strength
  • Falls within an acceptable range
  • Use different statistical techniques

72
TQM In Services
  • Service quality is more difficult to measure than
    the quality of goods
  • Service quality perceptions depend on
  • Intangible differences between products
  • Intangible expectations customers have of those
    products

73
Service Quality
The Operations Manager must recognize
  1. The tangible component of services is important
  2. The service process is important
  3. The service is judged against the customers
    expectations
  4. Exceptions will occur

74
ServiceSpecificationsat UPS
75
Determinants of Service Quality
  • Reliability
  • Responsiveness
  • Competence
  • Access
  • Courtesy
  • Communication
  • Credibility
  • Security
  • Understanding/ knowing the customer
  • Tangibles

76
Service Recovery Strategy
  • Managers should have a plan for when services
    fail
  • Marriotts LEARN routine
  • Listen
  • Empathize
  • Apologize
  • React
  • Notify
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